Fiduciaries Waive Account Rights in Settlement
>The settlement, obtained against the fiduciaries of Ohio Industries of Bucyrus, , orders the termination of the company’s retirement and health plans as soon as the fiduciaries repay the plans for losses resulting from their use of the plan’s assets to fund the company’s general operating expenses.
>The lawsuit, filed January 9, 2003, in US District Court in , alleged that the fiduciaries failed to remit employee contributions and loan repayments to the savings plan and failed to remit employee contributions and COBRA payments to the health plan. They also allegedly failed to secure a fidelity bond for the savings plan, as required by ERISA.
>Under the order, John Rice, Molly Rice and David Egner, fiduciaries of the company’s retirement and health plans, waived their rights to their individual account balances in the retirement savings plan to immediately repay a portion of the $34,074.09 due to the plan, and agreed to repay the balance owed to the savings plan by August 26, 2004, according to the DoL. Molly Rice agreed to advise the asset custodian to credit sums to the accounts of non-fiduciary participants of the savings plan on a pro rata basis and to notify these people, and the Rices agreed to repay $8,026.17 due to health plan participants by August 26, 2004.
Fiduciary Bars
>John Rice was barred permanently from serving in any fiduciary capacity to any plan governed by the Employee Retirement Income Security Act (ERISA). Once the savings plan is terminated, Molly Rice will be barred permanently from serving in any capacity to ERISA-covered plans.
“Plan officials have a duty to manage and protect benefit plans and their assets so that promised benefits can be provided to employees,” said Joseph Menez, Regional Director of the regional office in the department’s Employee Benefits Security Administration (EBSA), which conducted the investigation.
>Ohio Industries is in Chapter 7 bankruptcy. As of March 31, 2001, the Ohio Locomotive Crane Co., Inc. Savings Investment Plan had $1,964,061 in assets. The savings plan covered as many as 177 employees.
The DOL notes that employers with similar problems, who are not yet the subject of an investigation by EBSA, may be eligible to participate in the department’s Voluntary Fiduciary Correction Program (VFCP). Participation in the VFCP requires employers to make workers whole but allows them to avoid EBSA enforcement actions, civil penalties and applicable excise taxes. For more information, see www.dol.gov/ebsa